Dear fellow taxpayer

This week, whilst the Budget Speech is still abuzz, I thought I’d focus on the landmines announced last week that specifically affect employers. To do this, I have referred to Christa Botha, a Human Capital Manager at Ernst & Young. She tells us what to look out for as SARS clamps down on employers this year!

Enjoy!

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Finance Minister Trevor Manuel stressed in last week’s Budget Speech that the grace period for employers failing to submit their EMP501 reconciliations to SARS is gone for good. 

As an employer, you’ll now have 60 days after the end of the tax year to finalise your IRP5 certificates and submit the EMP501 reconciliations to SARS.  If you fail to submit the EMP501 reconciliation in time, SARS will impose a 10% penalty on the total employees’ tax you paid for the 2008/9 tax year.

This is, of course, to ensure that the deadlines for the filing season for individual taxpayers are met.

If you don’t submit the EMP501 reconciliation on time, your employees will be directly affected as SARS won’t release their tax returns... and if their tax returns aren’t released, they can’t submit their tax returns on the due dates and will be liable for a penalty for late submission. 

Remember: The filing season for individual taxpayers and trusts will start in July 2009. Taxpayers and trusts who file their tax returns manually must file their tax returns by no later than 18 September 2009.  Taxpayers and trusts who file their tax returns electronically must file their tax returns by no later than 20 November 2009.

It doesn’t end there...

Now, you’ll also have to submit EMP501 reconciliations to SARS more than once a year. This will include a reconciliation of unemployment insurance fund contributions and skills development levies!

You’ve been warned!

Mailbox

Answered by Matsika Vengesa of Tax Consulting SA

Do we have to provide our temps with payslips?

Dear Matsika,

Our company employs temps on short contracts – do we have to give them payslips? Further, considering that they also earn under the tax threshold, do we need to deduct UIF from their pay?

Answer:

The Basic Conditions of Employment Act says that every time an employer pays an employee, it must give the employee information, in writing, on the period for which they’re being paid, how much they’re getting, amounts being deducted and the actual amount paid. So yes, you’d have to give your temps payslips.

The only exception is if the temps are true independent contractors. This will only be the case if they’re not subject to your control or supervision regarding the way they do their jobs, their hours of work, or if they’re paid at regular daily/weekly/monthly intervals. If they don’t meet this test they’re not independent contractors but employees.

Similarly, UIF won’t have to be deducted if they are independent contractors, as I’ve described above. If they don’t meet the independent contractor test, you’ll have to deduct it. And remember that UIF needn’t be deducted where the employees work for less than 24 hours per month.  
 
Until next week.
 
Regards
 
Nothando Hlatshwayo

Managing Editor
The Practical Tax Handbook